HARRISBURG -- Democratic Gov. Ed Rendell and Republican legislators clashed yesterday on what legislative priorities should be pursued this spring, which might not bode well for progress.

Mr. Rendell spoke at a closed caucus of House Democrats in Camp Hill, just across the river from the Capitol, urging the Legislature to approve his $850 million energy conservation program and his health care plan, which includes Cover All Pennsylvanians, a program to provide health insurance for the 767,000 adults in the state who don't have insurance.

Meanwhile, House Republicans issued a call for a reduction in the state income tax when the Legislature adopts a new budget in June. Mr. Rendell was non-committal until the projected year-end surplus can be determined.

The Democrat-controlled House already has approved his energy conservation program, which is aimed at loosening the grip of foreign oil-producing countries on Pennsylvania drivers. Mr. Rendell wants requirements enacted to require gasoline, in 10 years, to contain at least 10 percent ethanol, made from corn, wood chips or certain kinds of grass.

He also wants to increase production of biodiesel fuel that contains at least 2 percent of fuel produced from soy beans.

He's hoping the Legislature will approve his energy plan by the end of next month.

"I think we're closer on energy," he said.

The Republican-controlled Senate, however, has approved its own $650 million energy plan, which differs from the governor's. The GOP plan would give loans or grants to counties or companies for clean energy projects, for pollution controls, for consumers who install energy conservation projects and for more low-income heating assistance. Republicans also object to a small utility bill surcharge Mr. Rendell wants to institute to pay for his plan.

On health care, Mr. Rendell wants to use about $200 million from a surplus of "Mcare funds," which help doctors pay for their medical malpractice insurance, along with higher cigarette taxes and a new tax on smokeless tobacco and cigars, to pay for health coverage for those who cannot afford it. He's looking for passage of the health insurance plan by March 31.

Republicans, however, are still balking at the tax increases.

House Democrats added a third priority for the spring -- property tax cuts. House Democratic leader Bill DeWeese wants to increase the sales tax by 0.5 percent and use that $750 million to increase the property tax cuts coming in July due to slots revenue. Rep. David Levdansky, D-Forward, has an even more ambitious plan for property tax cuts.

Meanwhile, House Republicans held a hearing yesterday with a notably different goal -- the first cut in the personal income tax, or PIT, in years. State Reps. Mike Turzai, R-Bradford Woods, and Tom Quigley, R-Montgomery, called for two bills that would lower the state's PIT, which since January 2004 has been at 3.07 percent.

The rate rose that year after the Legislature, in 2003, complied with Mr. Rendell's call for a higher personal income tax rate to erase a budget deficit. The previous PIT rate had been 2.8 percent.

But Mr. Turzai and Mr. Quigley said the state now has a budget surplus -- $650 million as of last June 30 -- so individuals and smaller businesses should benefit.

House Bill 1641, discussed yesterday at a Republican Policy Committee hearing, would lower the rate to 2.99 percent as of June 30. It would cost the state about $273 million in lost revenue, but Mr. Turzai said the state could afford it. It would still leave several hundred million dollars in the 2007-08 surplus, provided that an economic downturn doesn't hit the state.

Mr. Quigley, along with Rep. Daryl Metcalfe, R-Cranberry, is proposing a two-step drop in the PIT: first to 2.93 percent this July, then to 2.8 percent in July 2009. The proposal, House Bill 1092, would require either the use of considerably more of the budget surplus or spending cuts in other areas.

Rather than cutting, some Democrats may want to use surplus revenues for education or environmental projects, such as extending programs that put laptop computers in high school classrooms or expanding the number of all-day kindergarten classes.

Republicans don't control the House -- Democrats do, by a 102-101 margin -- but tax cutting is popular in an election year like 2008, so some Democrats might vote for one of the two tax-cut bills. Serious budget talks probably won't start until May or June.

Some Senate Republicans, such as President Pro Tem Joe Scarnati of Jefferson, also are talking about a personal income tax cut as part of the state's 2008-09 budget, which takes effect July 1.

Mr. Rendell didn't automatically rule out a tax reduction but said it wouldn't work if the national economy slows, or hits a recession, as some economic observers have been saying it will.

"I always review anything that any legislative body sends me," he said. "But even though Pennsylvania is doing better than most states [economically], some analysts are saying there will be a real slowdown this quarter. It's supposed to be brutal.

"The economic experts we hire for advice don't paint a very good picture for revenue and growth this fiscal year. It's going to be hard to cut any taxes."